stock

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Related to Equity securities: Financial Asset, Debt securities, Derivative securities

Stock

Ownership of a corporation indicated by shares, which represent a piece of the corporation's assets and earnings.

Stock

A portion of ownership in a corporation. The holder of a stock is entitled to the company's earnings and is responsible for its risk for the portion of the company that each stock represents. There are two main classes of stock: common stock and preferred stock. Common stock holders have the right to vote on major company decisions, such as whether or not to merge with another corporation, and receive dividends determined by management. Preferred stock holders do not usually have voting rights, but receive a minimum dividend. Stock may be bought or sold, usually, though not always, in the context of a securities exchange. It is important to note that a single share of a stock usually represents only a tiny amount of ownership, and, therefore, most stocks are traded in batches of 100.

stock

An ownership share or ownership shares in a corporation. See also bearer stock, common stock, preferred stock, stock class.

Stock.

Stock is an equity investment that represents part ownership in a corporation and entitles you to part of that corporation's earnings and assets.

Common stock gives shareholders voting rights but no guarantee of dividend payments. Preferred stock provides no voting rights but usually guarantees a dividend payment.

In the past, shareholders received a paper stock certificate -- called a security -- verifying the number of shares they owned. Today, share ownership is usually recorded electronically, and the shares are held in street name by your brokerage firm.

Stockclick for a larger image
Fig. 79 Stock. Diagram showing the main components.

stock

  1. the part of a firm's ASSETS that are held in the form of raw materials, work in progress and finished goods. These are also known as INVENTORIES. Finished goods are held in stock to ensure that goods are available when required by customers. Raw materials and components are held in stock to prevent disruptions to production caused by lack of materials or components and to secure economies from BULK BUYING. Decisions as to what level of stock to hold may not be entirely in the businessman's hands. Involuntary investment may occur when demand turns out to be less than a producer's expectations. Fig. 79 shows the main components of stock. See STOCK VALUATION, STOCK CONTROL, CONSIGNMENT INVENTORY, DEPENDENT INVENTORY, INDEPENDENT INVENTORY.
  2. a FINANCIAL SECURITY issued by a JOINT-STOCK COMPANY or by the government as a means of raising long-term capital. In some countries (for example the US) stockholders are the equivalent of shareholders and are the owners of the company In other countries (for example the UK) stock is a form of repayable, fixed-interest DEBT and stockholders are creditors of the company not shareholders. Stocks are traded on the STOCK MARKET. See SHARE CAPITAL.

stock

  1. the parts of a firm's ASSETS that are held in the form of raw materials, work-in-progress and finished goods. These are also known as INVENTORIES. Finished goods are held in stock to ensure that goods are available when required by customers. Raw materials and components are held in stock to prevent disruptions to production caused by lack of materials or components and to secure economies from bulk purchasing.

    The rate at which firms accumulate and deplete their stocks influences (see STOCK CONTROL) the oscillations in economic activity (see BUSINESS CYCLE). Although the increase and decrease in stocks operates on the same ACCELERATOR principle as capital investment, the decision as to what level of stock to hold may not be entirely in the businessman's hands. Involuntary investment may occur when demand turns out to be less than a producer's expectations so that stock builds up during downturns in the business cycle (see INVENTORY INVESTMENT).

  2. a FINANCIAL SECURITY issued by a JOINT-STOCK COMPANY or by the government as a means of raising long-term capital. In some countries (for example, the USA) stockholders are the equivalent of shareholders and are the owners of the company. In other countries (for example, the UK), stock is a form of repayable, fixed-interest DEBT, and stockholders are creditors of the company not shareholders. Stocks are traded on the STOCK EXCHANGE. See SHARE CAPITAL.
  3. a measurement of quantity at one specific point in time. Unlike a FLOW, a stock is not a function of time. The analogy is frequently made between a tank holding a given stock of water and water entering and leaving the tank as flows of water per minute.
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